Bangladesh's apex-chamber chief says businesses feel caught in a 'minimum-tax trap' that makes them pay 47-50-per cent corporate tax on their incomes though making that much profit is impossible in the current situation.
Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), says tax is also deducted at 5.0 to 7.0 per cent on different supplies of products and services.
As such, he adds, businesses get into difficulties as contracts for such services are usually signed for a longer period calculating all expenses.
"We want withdrawal of Advance Income Tax (AIT). What is the justification for collecting such tax that is refundable after payment?" he said at a seminar arranged by the National Board of Revenue (NBR) on the occasion of the National Income Tax Day 2021.
The Law Minister Anisul Huq attended the seminar as chief guest while NBR chairman Abu Hena Md Rahmatul Muneem moderated discussions on a wide spectrum of taxation matters and the spending of taxpayers' money.
President of the Institute of Chartered Accountants of Bangladesh (ICAB) Mahmudul Hasan Khasru and former president of ICAB Dr Jamal Uddin Ahmed, now general secretary of Bangladesh Economic Association (BEA), also spoke at the programme. Income tax member (Audit and intelligence) Sams Uddin Ahmed and VAT member Masud Sadiq spoke as panelists.
Both the apex-trade-body leader and the ICAB president demanded withdrawal of the minimum-tax provision on withholding tax, saying that "income tax should be imposed on income only".
Responding to the FBCCI and ICAB leaders' demand, the NBR chairman agreed on the point -- collection of income tax on income -- but declined to do it hurriedly amid prevalent tendency of tax evasion.
"To evade taxes, people receive salaries in cash. We have to come out from cash transactions," he said, underlining the urgency felt by many of digitizing the entire system tax collection and spending.
Mr Jamal suggests the government should empower the NBR, build its capacity and develop infrastructure to collect more tax by expanding tax net.
NBR member VAT Policy Masud Sadiq said digitization is the only option to tap the potential tax-receipt sectors.
The FBCCI president proposed to resume the joint taskforce between the NBR and the FBCCI to frame participatory tax measures.
The NBR chairman said the country's tax-GDP ratio is low due to dependence on customs revenue and that it has to be shifted to direct tax.
NBR member, income-tax policy, Md Alamgir Hossain said the tax collection increased gradually despite reduction in tax rates.
Sams Uddin Armed resented a keynote paper at the seminar.
The ICAB president said the Document Verification System of ICAB helped check cooked financial-audit report.
On draft income-tax law, he said the country wants one book, one law.
The law minister had an important suggestion on taxing people and spending their money -- a pivotal question made frequently over time but remained to be answered plausibly. He said those in authority, in this respect, should be "responsible on expenditure of taxpayers' money".
He felt the need for capacity development of tax department to fit in the modern-day fiscal regime.